Interest rates edge lower after lower demand at $16 billion auction of 30-year bonds

Interest rates edge lower after 30-yr bond auction

CHARLOTTE, N.C. — Interest rates edged lower in the bond market Thursday after a new report on jobs showed the economy is improving at a slow but steady pace.

An auction of new 30-year bonds on Thursday drew slightly weaker results.

Slightly better news from the Labor Department on weekly first-time claims for jobless benefits did little to reassure investors of a fast-paced economic recovery. Stocks traded in a tight range, with the Dow losing 65 points in afternoon trading, increasing demand for safe investments like Treasurys.

The yield on the 10-year Treasury note that matures in February 2020 fell to 3.57 percent in afternoon trading Thursday from 3.58 percent late Wednesday. Its price rose 3.125 cents to $99.34375. Bond yields rise when their prices fall.

The yield on the 10-year note is often used as a benchmark for setting interest rates on consumer loans and mortgages. It has dipped over the past month after briefly rising to 4 percent in April, its highest level since June.

Treasury prices remained lower after the government auctioned $16 billion in 30-year bonds, wrapping up $78 billion in new Treasury issuance this week. Earlier in the day interest rates were higher.

The yield on the 30-year bond that matures in February 2040 fell to 4.47 percent from 4.48 percent. Its price rose 18.75 cents to $102.50.

Bonds have been in high demand this week, with Wednesday’s $24 billion sale of 10-year notes and Tuesday’s $38 billion sale of three-year notes both bringing strong bidders. The bid-to-cover ratio on Thursday’s sale of 30-year bonds was 2.60. That’s a little weaker than recent auctions for bonds with similar maturities.

Mediocre economic news sent investors into Treasurys and dampened demand for stocks.

The Labor Department said first-time claims for jobless benefits dipped to 444,000 last week from an upwardly revised 448,000 the previous week. Economists had expected claims to drop to 440,000.

While a fourth straight weekly decline in claims is a welcome sign, it hasn’t been enough to signal sustainable job growth. The unemployment rate now sits at to 9.9 percent.

In other trading, the yield on the 2-year note that matures in April 2012 was unchanged from 0.87 percent, and its price was $100.25.

The yield on the 5-year note that matures in April 2015 was unchanged from 2.28 percent. Its price was $101.

The yield on the three-month Treasury bill that matures August 12 rose to 0.16 percent from 0.15 percent.